Singapore: The can-do spirit of a unique truck market

From simple beginnings, Singapore has grown to become one of the key hubs in global transportation. Easy to get around—nowhere is more than an hour away—it’s also an important and unusual market for all kinds of trucks. Kay Kong Swan (above and right) of leading logistics firm CWT explains how things get moved around in this city-state.

Singapore is perhaps the ultimate can-do country. From the taxi driver waiting in front of Changi Airport, to the hotel receptionist, to everybody you meet, the first word is, “Yes, can do! No problem!” The rags-to-riches saga of Singapore is well known: the separation from the Malaysian Federation in 1965 as a tiny city-state with no natural resources and an uncertain future; then its transformation into one of the most prosperous countries in the world, with a per-capita GDP that is in the top rank of nations. Things in Singapore work. Singapore also has the second-busiest port in the world, just behind Shanghai. Overlooking the loading and unloading of ships through the floor-to-ceiling windows of his office is Kay Kong Swan, CEO of Container & Steel Logistics Business for the CWT Group. Mr. Kay has been in the industry for the past 16 years. “Singapore has always been an entrepot,” he says, referring to its role in importing, exporting and also reshipping goods. “It was set up in 1819 as a trading post by the British. And that is what we still are. Mr. Kay is charismatic, easy and just plain fun to interview. Everything is possible, Singapore style. “You need a truck with driver this afternoon for the photos? No problem. Why don’t you take two? I will have them clean and shining in an hour. No problem.”

Mr. Kay - CEO of Container & Steel Logistics Business for the CWT Group

CWT is one of Singapore’s largest companies. Originally the letters stood for Container Warehousing Transportation, an ample description of the company’s activities. Today, however, they stand for the more 21st-century Connecting World Trade. Which is also true. CWT was set up in 1970 as a private arm of the Port of Singapore Authority to provide warehousing and container trucking services. One of the earliest logistics and trucking companies in Singapore, CWT later diversified into other logistics and related services, including commodity logistics and supply-chain management, freight forwarding, engineering and financial services. CWT was first listed on the Singapore Exchange in 1993. Today, CWT operates in about 50 countries, offering integrated logistics solutions to worldwide customers. It connects customers to 120 ports around the world, and more than 1,200 inland destinations. CWT also owns and operates around 200 trucks in Singapore, many of them UD Trucks vehicles.CWT provides integrated logistics solutions to a wide range of customers from various industries. The list of complex and sophisticated value-adding services includes everything from the storage and repackaging of bulk goods to end-user specifications, to transport and even engineering solutions. While Singapore’s strategic location is important, it takes many other factors to become a successful trading port, Mr. Kaysays. “The basis is the drive by the Singapore government, which from the beginning has been pushing the hub concept. First of all, you need first-class connectivity. We have that with two ports and a very strong airport. But you also need strong infrastructure. You need land productivity. You must deliver on time, every time. Our road system is fantastic—it takes about an hour or so to travel by truck from one end of the island to the other.” While Mr. Kay doesn't mention it, you presumably also need a well-educated and disciplined workforce, which Singapore has. And, yes, that can-do attitude. The road system in Singapore is indeed fantastic. It’s also remarkably uncongested for such a busy place—there are around five million people living in Singapore. One thing that in particular makes Singapore a very special truck and transportation market is that, without a Certificate of Entitlement (COE), you are not allowed to own a vehicle. This system in effect requires vehicle owners in Singapore to bid for the right to buy a motor vehicle, with the number of certificates deliberately restricted. Biddings are held bimonthly, with the prices varying from month to month depending on demand and supply. Roughly speaking, for an entry-level medium-duty truck, the current cost of the COE is about 80 percent of the price of the truck itself. The number of new trucks registered per year is rather stable at around 1,000. This makes Singapore one of the toughest truck markets in the world.

Not only are all major European and Japanese truck brands competing here—but with the COE system, it’s a zero-sum game, where growth can only come with a loss by a competitor. The Singapore truck market is divided into “continental” (meaning European) and Japanese makers. The Japanese, with UD Trucks as one of the three biggest players, hold about eighty percent of the total. “Trucking here is exclusively short haul,” Mr. Kay says. “You’ll find everything from heavy- to light-duty trucks here, but you can reach anywhere on the island normally within an hour. Singapore-registered trucks seldom travel into Malaysia, so even the largest trucks rarely find themselves travelling on long-distance routes. “That means that the typical work day of our drivers consists of a large number of short trips,” he continues. “The average is around ten trips per day. That means that the truck is idling a considerable part of the day, and the driver spend much more time waiting, compared to larger countries. Singapore is tropical, so good air conditioning and truck comfort are important.” For these reasons, Mr. Kay says that CWT mainly chooses Japanese over continental. “It’s not that European trucks are not good,” he says. “They are very good for long hauls and they are often technically more sophisticated, but Japanese trucks fit our business better. Today most new trucks in our fleet are UD. Another reason is that ordinary drivers prefer simple-to-use and comfortable trucks.” The voice of the driver is, in fact, very important for CWT. “Besides a good and reliable truck, the driver plays an important role in fulfilling deliveries, so we want to make sure that the driver has a good working environment when driving the truck. This is why when we plan to buy a truck, perhaps a new one from UD Trucks, we also ask for feedback from our drivers. They definitely have a say in the purchase process. We believe such engagement is mutually beneficial—it gives our drivers perceived ownership of the truck and helps optimize their working conditions, which in turn boosts work productivity.” CWT’s relationship with UD Trucks goes back many years. In recent years, however, CWT has been buying more UD trucks than the vehicles of other makers.

Mr. Kay explains that this is for reasons that go beyond just the vehicle. “The prices are almost same for all Japanese trucks,” he says. “The features are also rather similar. The differentiation, and the most important part for us, is in the aftersales service and support. I think UD Trucks is doing this very well. It helps that their service center is here in the Jurong area, only a short trip away. That means that the turnaround time is shorter. “The economy of scale—UD Trucks being one of the biggest Japanese truck brands here—also means that spare parts are more readily available,” he continues. “But the pivotal event was UD’s introduction of Euro 4 emission standard trucks in 2006. We knew this was coming, but UD was much faster than other makers. They went directly from Euro 2 to Euro 4, leapfrogging Euro 3. CWT wants to be a first-mover in our industry, and I like doing business with other first-movers. That’s when our working relationship with UD Trucks became much closer. It helped us to get ahead.”